Rathman Company purchased (at a cost of $10,900) and used 2,300 pounds of materials during May. Rathman’s standard cost of materials per unit produced is based on 2 pounds per unit at a cost of $5 per pound. Production in May was 1,070 units.
Instructions
(a) Compute the total, price, and quantity variances for materials.
(b) Assume Rathman also had an unfavorable labor quantity variance. What is a possible scenario that would provide one cause for the variances computed in (a) and the unfavorable labor quantity variance?